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Local Audit Bill has “gaping holes”, says Hodge

DRAFT LEGISLATION intended to deliver a more efficient and transparent local audit system could undermine the integrity of the process, MPs have warned.

A report scrutinising the draft Local Public Audit Bill suggests the legislation still requires a lot of work and may fail to deliver some of its key objectives.

Following the dismantlement of the Audit Commission, a draft local audit bill was created as part of a new audit regime where local public bodies appoint their own auditors.

A select committee met to discuss possible changes to the draft and to consider whether the draft bill will meet government objectives to create an efficient and transparent local audit system. It included appropriate safeguards for the integrity of the audit system, as well as to ensure accountability to local people.

Launching the report, Margaret Hodge [pictured], chair of the Public Accounts Committee, suggested the arrangements set out in the bill “will result in a more complex and fragmented audit regime”.

“We believe that the principle of independent audit – which has guided public sector audit for the last 150 years – could be undermined if the bill is not amended,” Hodge said.

“The legislation also has some gaping holes that pose significant risks. Unless stronger safeguards are put into the legislation, whistleblowers might not be able to draw attention to serious failures in local governance.”

Writing in his ICAEW blog, institute chief executive Michael Izza said he was taking a “more sanguine view of the Bill as a whole” but highlighted areas where more thought is needed.

“Audit Committees need to be protected from political interference, for example, by giving them a statutory footing with an independent chair and independent members,” Izza said.